863.51 Relief Credits/43: Telegram

The Minister in Austria ( Washburn ) to the Secretary of State

12. (1) Department’s telegram 16, March 5, 6 p.m. Foreign Office has shown me protocol of Relief Bonds Committee meeting which indicates that “consent in principle” mentioned in Committee’s letter of December 12 refers to the three conditions therein enumerated as stated on page 6 of my despatch number 1664, December 28.27 Condition one refers to the United States, condition two met by resolution transmitted as exhibit 5 of my despatch 1692, January 23.28 Specific security mentioned in condition three not yet agreed upon with underwriting bankers because negotiations await Congressional action but when approved by Relief Committee’s English chairman Leith Ross it is the understanding here that subordination of relief bonds lien becomes automatic assuming American Government acts; apparently nobody has hinted that this third condition will be utilized to exert presure on the Austrian Government.

(2) Status of relief debt negotiations: Foreign Office assures me that French, Italian, Swiss and Dutch Governments have indicated [Page 886] their willingness to accept Austrian proposal set forth in enclosure C of Prochnik’s note of January 2829 provided British Government will do the same. Austrian Minister at London reports that British Government shows good will but Chancellor of the Exchequer has not yet given final answer. Schüller admits he recognized necessity for making proposal for relief bond settlement but there has been no suggestion of any intention to make such settlement a condition precedent of lien subordination and this would be contrary to terms of letter of December 12 but he does not exclude possibility that interested parties would welcome it if the United States should stipulate such condition precedent. Schüller relies on Mussolini’s personal promise of favorable action though latter’s South Tyrol speech on Saturday30 contained threat Italy may delay loan.

(3) Why is not situation fully met by passage of a joint resolution similar to that of April 6, 1922,31 mentioned in Department’s telegram 20, October 28, 1927?32 Secretary of the Treasury could then exercise his discretion in the light of the action of other interested powers.

Washburn
  1. Foreign Relations, 1927, vol. i, p. 465.
  2. Enclosure to despatch 1692 not printed; but see paragraph (6) of telegram No. 13, Jan. 14, 1928, from the Chargé in France, p. 859.
  3. Ante, p. 866.
  4. March 3, 1928.
  5. 42 Stat. 491.
  6. Foreign Relations, 1927, vol. i, p. 454.